- Pebble is a crypto neobank that offers 5% APY and 5% cashback on certain purchases.
- The startup was founded by two UC Berkley grads, who came up with the idea in a business class.
- Here’s the deck Pebble used to raise $6.2 million from Y-Combinator, Lightshed Ventures, and others.
It was during a fourth-year business class that Aaron Bai and Sahil Phadnis had their light-bulb moment to found Pebble.
The then-UC Berkley students were assigned a group project to pitch a startup to the rest of the class. It was early-2021, when crypto was riding high and re-emerged as a trending topic after digital currencies like Bitcoin, Ethereum, and Litecoin experienced a lift in the market.
“Me and Aaron wanted to do a crypto one and the entire group was like, ‘No, this is a scam, we’re not going to do anything crypto,'” Phadnis, the startup’s CTO, told Insider. “It was kind of a wow moment.”
Pebble
The pushback from their classmates ignited a curiosity and drive in Bai and Phadnis to find a more accessible way to get the average person interested in crypto. That led to the founding of Pebble, a mobile app where users can deposit money and earn a 5% yield.
On the back end, Pebble converts deposits to USDC, a stablecoin that’s seen as less volatile than other digital currencies. Through an intermediary, Pebble lends the USDC to institutional firms that are in search for
liquidity
in the cryptocurrency market, Bai said.
Other services of the
neobank
include a 5% cash-back reward when users make purchases through Pebble at one of 56 merchants, such as Amazon,
UberEats
, and Whole Foods.
Behind the scenes, the direct funnel to the merchants’ digital environments means Pebble can cut out middle players that charge payment fees, like Visa and Mastercard, and issue cash-back rewards to its users in the form of gift cards that can be spent online or in person at the corresponding stores, Bai said.
The concept garnered the attention of investors, including Y Combinator, Lightshed Ventures, and Soma Capital, among others. The fintech raised a $6.2 million seed round on March 23. The team of four, which includes two other engineers, has aspirations to expand globally, targeting Southeast Asia, Bai said.
But Pebble — which provides a debit card, bank account with high-percentage yields, and cash-back rewards — does not see itself as a challenger bank, like Chime or Varo Bank.
“All these different
neobanks
out in the market, what have they truly done differently than the old banks, the Bank of Americas, the Wells Fargos,” Bai said. “They’re partnered with these old banks and they provide the same system and the same features as these old banks, except they created a pretty UI,” he added.
To be sure, Pebble’s debit-card offering is in collaboration with Mastercard and it uses intermediaries Vauld and Wyre to lend the stablecoin to the institutions.
With Pebble, Bai and Phadmis say they are “creating a financial app on an entirely new set of rails. It might seem analogous to a crypto bank, but I like to say we’re building a new financial system,” Phadnis said.
Eco founder alleged Pebble reused company materials
Not everyone thought Pebble’s offering was all that new, however.
On Monday, when Pebble came out of stealth mode to launch, another fintech founder accused Pebble cofounders of plagiarizing its materials on Twitter, including calling the pitch deck “uncannily similar” to its own.
—Andy Bromberg (@andy_bromberg) May 23, 2022
Andy Bromberg is the CEO of Eco, a fintech that offers 5% yields on deposits and 5% cash back. Bromberg claimed in a TechCrunch report that several parts of Pebble’s product and marketing language are copied from Eco. In his Twitter thread, Bromberg also accused Bai and Phadnis of pretending to be Y Combinator investors to get on Eco’s waitlist and of asking detailed questions about Eco’s underlying technology under the premise of wanting to get a job at Eco.
“We continue to believe that Pebble’s actions crossed a line and that they should be held accountable for doing so,” Eco’s Bromberg told Insider in a written statement. “That said, we are focusing all of Eco’s energy on building the best possible products for our community rather than dwelling on a copycat.”
Pebble cofounders could not be reached for additional comment following Monday’s controversy.
